CNS Picks Top 14 Stocks for a Weak Thai Baht

Capital Nomura Securities (CNS) expects the Thai stock market to have a downside as Thailand continues to see a record daily spike in Covid-19 cases despite the government’s vaccine procurement plan being more apparent. Thus, a resistance level and support level are given at 1,596/1,600 points and 1,582/1,569 points, respectively.

CNS suggests a selective buy investment strategy and buying on weakness in the following sectors: Earnings Plays, Export Plays, Telecommunications Plays-Value Plays, Hospital Plays, and Beverage Plays.

Highlighted Stock: CHG (Upgrade target price from 3.60 baht to 4.40 baht)

CHG’s earnings in 2Q21 are expected at 363 million baht (+135% YoY, +44% QoQ) as a result of 1) higher revenue outlook from Covid-19-related services, which will account for 25% of total revenue in 2Q21, as well as an improvement in social security scheme and general patients.

2) Gross margin is expected to grow YoY and QoQ to 30.2%, and 3) SG&A could decrease to 9.5%. Thus, CNS revised up the 2021-2022 earnings forecast to +21% and +13%, respectively.

Meanwhile, the government’s approval to procure 20 million doses of Pfizer Covid-19 vaccine, which is expected to arrive in Thailand in 4Q21, as another major pillar of the country’s national immunization campaign, could put pressure on Hospital Plays.

In addition, although the amount of Moderna vaccines scheduled to deliver to Thailand between 4Q21 and early 2022 is expected to be less than demand, it is not likely to have a negative impact on the profit projections for hospital stocks under CNS’s coverage.

CNS maintains its “BUY” recommendation on Medical Plays, raising BCH (TP: 33 baht) and BDMS (TP: 29 baht) are Top Picks.  

Also, CNS recommends stocks that will benefit from weak Thai baht. Top Picks are TU, CPF, ASIAN, NER, XO, SAPPE, SVI, HANA, KCE, AMATA and EPG.